Prices for WTI and Brent oil reversed declines as positive employment numbers and geopolitical tension put upward pressure on prices. For June delivery, WTI was up 10 cents per barrel and Brent jumped 60 cents on May 2. The two benchmarks regained some lost ground after hitting a five-week low earlier this week.
The U.S. Labor Department reported that employers added 288,000 jobs in the month of April, suggesting that the U.S. economy is picking up steam. The unemployment rate also dropped to 6.3 percent, the lowest it has been since 2008. The U.S. remains the world's largest consumer of oil, and the positive economic news pushed up oil prices.
The Russia-Ukraine crisis also created pressure on oil prices. Violence escalated to its highest point in the weeks-long standoff between Kiev and Russia on May 2, when pro-Russian rebels shot down two Ukrainian helicopters, killing three. Following the incident, a spokesman for Russian President Vladimir Putin said, "The Kiev regime ordered combat aircraft to fire at civilian towns and villages, launching a 'punitive operation' and effectively destroying all hope for the viability of the Geneva agreements." The comments could be an indication that Russia feels it has basis to invade Ukraine to protect its interests.
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Russia's Micex Index dropped 0.5 percent on the news, and the ruble lost 0.5 percent.
Meanwhile, Russia's energy minister said that Gazprom would reduce natural gas supplies to Ukraine in June if it fails to receive payment.
Despite positive economic news and tension in Ukraine, oil prices avoided sharper increases. U.S. crude inventories hit a record high last week, leaving oil markets well supplied. Also, Libya is expected to step up oil exports once again after a conflict with rebels kept its ports shut for months.
By Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More